Russia - Iran: Western Sanctions as a Stimulus for Development of Relations

Russia - Iran: Western Sanctions as a Stimulus for Development of Relations

Relations between Russia and Iran are experiencing a stage of dynamic development. Both parties are making significant efforts to reach a qualitatively new level of cooperation in all areas of interstate relations. Great expectations are attached to the upcoming visit of Russia's president to Iran. This could very well take place in the first half of this year. The schedule for Iranian president Hasan Rouhani's participation in the Caspian summit in Astrakhan in September 2014 has also been fully coordinated…

The fast pace of dialog between the two countries testifies to the active preparations for the summit among the Russian and Iranian leadership. The period of December 2013 – April 2014 saw an exchange of visits of foreign ministers and intergovernmental contacts in the area of economics. Among the latter, one should note the visit of Russian Minister of Energy Aleksandr Novak to Tehran. The productivity of the visit of the head of Russia's Ministry of Energy, who is also the co-chairman of the Permanent Russian-Iranian Commission for Trade and Economic Cooperation, was closely linked with earlier agreements between the parties on the highest political level. Presidents Vladimir Putin and Hasan Rouhani met on the sidelines of the SCO summit in Bishkek on September 13, 2013. The agreements reached at that time between Moscow and Tehran were not set down in a written document, but the idea of the «Bishkek Agreements between the two presidents» has become part of expert assessments and politicians' statements. The Iranian ambassador in Moscow, Mehdi Sanaei, described the Putin-Rouhani meeting as «a vivid event which in the future will be inscribed in the history of relations between the two countries». During a conversation with the president of the IRI on April 28, Minister of Energy Novak emphasized that the Russian president is personally monitoring the implementation of the agreements reached in Bishkek and paying special attention to relations with Iran in general. 

Within the scope of the agreements between Russia and Iran are the resolution of the dispute over shipments of Russian S-300 missile defense systems to Iran and construction of a second power producing unit at the nuclear power plant in Bushehr, Iran by Rosatom. Now the parties' attention is focused on an oil deal in which Russia could take on the unaccustomed role of a large importer of energy resources from the Middle Eastern region. A shift toward the resolution of any of these issues will bring the parties closer to progress in related areas as well. Moscow and Tehran are trying out the package method of achieving results, comprehensively encompassing all relevant areas of cooperation. For example, the following scenario is possible: Iran would withdraw its arbitration claims against Russia in connection with the breaking of the 2007 contract (for the delivery of five divisions of S-300 PMU-1 systems), after which the parties would launch extensive military technical and economic cooperation with an emphasis on energy. 

The Iranians are inviting companies from Russia to take part in projects for developing their railroad system. The package format for future agreements can be seen here as well. Russia could set up joint production of rails with its Iranian partners, supply rolling stock, and work on the electrification of the IRI's main rail lines. In 2012 Russian Railways completed the electrification of a 46-km line between Tabriz and Azarshahr. New projects are on the agenda for Russian rail workers and their Iranian colleagues.

The West's course of imposing sanctions against Russia objectively brings Moscow and Tehran closer together. One of the West's goals for its policy of isolating Iran in previous stages was maximally complicating its relations with Russia. This goal has not lost its relevance even after the process of improving relations between Western states and Iran started on November 24, 2013. Washington is reacting very nervously to the oil contract being discussed by Moscow and Tehran. After all, Iran will not simply send a certain volume of black gold north (Russian companies are prepared to acquire 500 barrels of oil a day from their Iranian partners) and receive needed goods for it; the possibility of Iran paying for other services from Russia with oil is also under consideration. For example, those related to the implementation of projects for building a second power producing unit at the Bushehr nuclear power plant, the laying of power lines from Russia through Azerbaijan to northern provinces of Iran, and the construction of new generating capacities for Iran and the modernization of existing ones. Russian-Iran projects in the field of electric power alone could amount to $10 billion (construction of a hydroelectric plant and export of 500 MW of electric power from Russia to Iran). 

Iran could pay for part of potential orders of Russian goods and services with oil in such projects under discussion as shipments of grain and technical equipment to Iran as well. Circumventing systems of paying for Iranian oil with «cold cash» is made necessary by the continued regime of harsh financial and trade limitations imposed on the IRI in relations with foreign partners. If you add the attempts of Russia and Iran to transition to using their own currencies in their payments, U.S. fears of «losing control of the situation» becomes even more pronounced. After all, if the Russian-Iranian oil contract is implemented, the total export of Iranian oil could exceed the threshold of 1 million barrels a day agreed upon in the interim agreement reached with the P5+1 on November 24, 2013.

As far as one can judge from statements made by Washington, the U.S. administration has no clear-cut plan with regard to improving relations with Iran or in its policy of pressuring Russia with sanctions with the goal of isolating it. In taking steps to hinder closer relations between Tehran and Moscow, the U.S. is reminiscent of a tightrope walker who has frozen midway across and risks losing his equilibrium. It is doubtful that it will be able to balance in this position for long. The Americans emphasize that the sanctions against Russia are a process of which even the interim results cannot be assessed. As for Iran, it has already built up a certain immunity to the problems which arise in connection with the imposition of sanctions. It also has experience in counteracting sanctions. 

By broadening and deepening their ties, Russia and Iran will demonstrate the futility of attempts by outside forces to affect this process. The relations of the two natural partners can be slowed, and even for a long time, but the superpower, which has lost its sense of reality, is unable to hinder their development. The sanctions which Washington would like to make a show of the United States' power will have the opposite effect; they only reveal the uncertainty of the American «tightrope walker's» steps in resolving acute international problems.